Econ 311 Quiz 3 solutions

# Econ 311 Quiz 3 solutions - Intermediate Macroeconomics 311...

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Intermediate Macroeconomics 311 (Professor Gordon) Quiz 3: November 2, 2007; 9AM 30 minutes Note : This is a closed book assignment. You may use calculators. YOUR NAME: ________________________________ Directions : Answer each of the following questions. You must show all your work. Partial credit will be awarded for question 2. QUESTION 1: Multiple Choice (10 Points) Choose the one alternative that best completes the statement or answers the question. 1. Employing the government budget diagram shown in Figure 1, assume that the economy is initially in equilibrium at point A. The movement A to D represents (a) an increase in government spending and/or a decrease in taxes. (b) a decrease in government spending and/or an increase in taxes. (c) a decrease in government spending and a decrease in taxes. (d) an increase in government spending and an increase in taxes by a factor of (5300/5000). 2. In Figure 1, the impact of automatic stabilization is depicted by the movement from (a) A to F. (b) A to B. (c) 0 to F. (d) D to A. 3. Assume that the economy is initially in equilibrium at point A in Figure 1. If the budget line is BB 0 and the natural real GDP is \$5300, the structural surplus or deficit is (a) FC. (b) AB. (c) FA. (d) none of the above.

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A large government budget deficit _____ government saving and _____ national saving. (a) raises, raises (b) raises, lowers (c) lowers, raises (d) lowers, lowers 5. If S = 300, T = 800, G = 1100, and I = 150, this makes net foreign investment (net exports): (a) 150. (b) –150.
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## This homework help was uploaded on 04/07/2008 for the course ECON 311 taught by Professor Gordon during the Fall '08 term at Northwestern.

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Econ 311 Quiz 3 solutions - Intermediate Macroeconomics 311...

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